This company offers a lot of hospitality choices. Choice Hotels
is a leading hotel franchisor with more than 6,500 locations
throughout the US and more than 35 other countries. Its
flagship brands include Comfort Inn, one of the largest
limited-service brands with about 3,000 properties (including
Comfort Suites) along with Quality Inn, which serves the
midscale hotel segment. Its Econo Lodge chain offers lodging
primarily for budget-minded travelers. Other Choice Hotels brands
include the full-service Clarion chain, Rodeway Inn budget hotels,
and Sleep Inn.
In 2013 Choice Hotels moved to new global headquarters in
With some 1,160 hotels located outside the US, the company's
international franchising operations account for less than 10% of
sales. During the first half of 2012 Choice Hotels opened new
international properties in Australia, Brazil, Canada, Czech
Republic, France, Germany, Honduras, Italy, New Zealand, and
Sales and Marketing
The company spent $79.7 million on advertising in fiscal
Choice Hotels gets nearly all of its revenue
(more than 90% in fiscal 2012) from royalty fees and by providing
marketing and reservation services for its franchisees. In fiscal
2011 and 2012 the company reported growth in revenues and profits
compared to the previous year, thanks to a recovering economy.
Specifically, revenue increased by about 8% and net income
increased by more than 9% in fiscal 2012 compared to 2011.
Revenue increased from $596.1 million in
fiscal 2010 to about $638.8 in fiscal 2011. Revenue went up to
$691.5 million in fiscal 2012. The revenue increase was
attributable to an increase in royalty fees due to higher revenue
per available room, an increase in the effective rate of the
domestic hotel system, and an increase in franchising revenues. Net
income increased in fiscal 2012 due to the increase in revenue and
a lower income tax rate versus the prior year.
The company's cash flow was positive during
fiscal 2012 due to increased cash from operating activities offset
by increased use of cash from investing activities. The increase in
cash utilized for investing activities from 2011 to 2012 was
primarily due to an increase in capital expenditures, an increase
in net financing provided to franchisees, and equity method
investments entered into during fiscal 2012.
Choice Hotels tries to increase its profits by improving the
performance of its existing hotels, increasing system size by
selling additional hotel franchises, effective royalty rate
improvement, and maintaining a disciplined cost structure.
The company's strategy includes offering a mix of segmented
brands for consumers and developers. Being a franchisor rather than
a hotel operator has helped it expand Choice Hotels' portfolio
of properties in a relatively low-cost manner. During
2012 Choice Hotels had a pipeline of some 450 hotels
under construction, awaiting conversion to one of its brands, or
approved for development.
Chairman Stewart Bainum and his family control more than 80% of
the company along with board member Scott Renschler and his